Legislative and Operating Frameworks: the unanswered questions

Blog post

Published: 16/12/2010

Tis the festive season but no let up is apparent in the health reform agenda.  Yesterday saw the publication by the Department of Health of the 167 page Liberating the NHS: Legislative framework and next steps and the Operating Framework for the NHS in England 2011/12.

The first is thoughtful and detailed, taking care to weave in responses from as many as possible and explain the rationale for decisions. The messages are clear – radical change, no going soft on the pace of reform, and decentralise. These are meant to be one-off reforms after which local commissioners and providers can evolve provided that they perform, although in reality there is not much to stop a future government reversing them.

The powers of the Secretary of State are to be restricted – no power of direction over the NHS Commissioning Board (now NHS England) or to direct individual commissioning bodies – and the NHS Commissioning Board will be a “quasi-regulator” with no general powers of direction over consortia, but with powers to intervene in cases of failure.

For commissioning, much hinges on the duty to co-operate – at national level between the Board, Monitor and Care Quality Commission, and locally between the consortia, Health and Wellbeing Boards and providers. On the other hand, for hospital providers, more faith is put in competition as a stimulant of better performance. While all trusts will become foundation trusts, Monitor evolves into an economic regulator, for example setting prices and regulating competition, and retains its powers of compliance and intervention only temporarily for an identified cohort of high risk foundation trusts.

Inevitably, there are still many unanswered questions:

  • The arrangements to boost accountability of consortia to local people still look limp. If GP consortia are not responsible for resolving PCTs ‘legacy debts’, how will PCTs resolve this by 2012/13?
  • How exactly will risk pool arrangements for commissioning be arrived at, especially for GP consortia?
  • How will contracts for primary care really be managed at national level by the Board?
  • How exactly will conflicts of interests by GP providers who are also commissioners be managed?

There is still much to be worked out, in a short timescale.

The Operating Framework has a different flavour – one of central grip to effect the reforms, and help manage achieve the 4 per cent efficiencies needed.

Here the themes are more familiar: PCTs allocations will be topsliced by 2 per cent by SHAs for non-recurrent spending ‘to meet the costs of change’; the tariff will be reduced by 1.5 per cent, with reductions of the same intended for non-tariffed services; pay will be frozen for two years and so on.

More worrying is the confirmed intention to set maximum prices since evidence strongly suggests that the price competition that will result delivers lower quality care. This is in part because price is more observable (economists’ lingo) than quality, and in part because disproportionate time is spent when contracting in haggling over price (remember fundholding) than quality.

But despite the tone of grip, the extent of the turbulence and insecurity being faced, particularly by staff in PCTs, comes through. The extensive evidence that exists on the distractions of organisational disruption on patient care and financial control was a point not lost on the Health Committee, which reported earlier this week. And the central ‘grip’ will reduce after 2013 after which significant efficiencies still need to be made. Our annual and popular Health Strategy Summit will be focusing on how next March.

We may think we are alone, but rest assured other countries are facing an economic downturn, although not radical reform at the same time. How they approach increasing quality in such an environment was the topic of a meeting held by the Nuffield Trust, in collaboration with the Salzburg Global Seminar and the British Medical Journal, in Salzburg last month.  People from 29 countries took part, and some highly innovative solutions discussed.

And finally, for those who like interesting graphs, check out slide 14 in this slidepack, from our latest report, which shows how social care appears to substitute for inpatient care in the very old. This unique analysis linked person-level data on an individual’s use of NHS and social care – the first time to our knowledge.

For more analysis of this type, watch this space.

Suggested citation

Dixon J (2010) ‘Legislative and Operating Frameworks: the unanswered questions’. Nuffield Trust comment, 16 December 2010. https://www.nuffieldtrust.org.uk/news-item/legislative-and-operating-frameworks-the-unanswered-questions